European equities moderately extended last week’s drop, as new virus data suggested setbacks in global efforts to contain coronavirus pandemic, with airlines and other travel-exposed stocks leading declines.
The Stoxx Europe 600 Index was down 0.4% as of 8:20 am in London, with most sectors in negative territory. German stocks rose 0.4%, while Spain’s IBEX was the worst-performing large-country benchmark with a decline of more than 1%.
Equities in the region retreated from their crisis highs last week amid concerns over global trade as Sino-US relations worsened, and worsening outbreaks in some of Europe’s key export markets. Major country benchmarks diverged in their recovery, with Germany’s DAX briefly reaching a new intraday high for 2020 while Britain’s FTSE 100 and France’s CAC remain about 19% and 17% short of January levels, respectively.
Germany’s outperformance in recent months is owed to its handling of the pandemic, according to Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany. Nevertheless, after a weeks-long upswing driven by central bank liquidity, a small correction like we’ve been seeing since Friday is more than normal, Sampere told Bloomberg in a phone interview. Market valuations remain at fundamentally implausible levels after a
de-coupling from the real economy, he said.
Software firm SAP SE rose 4% after announcing plans to spin off a unit and boosting its full-year guidance. Insolvent payments firm Wirecard AG, was the region’s top performer, rising 33% after its administrator said late on Friday that 77 parties had shown interest in its core business.